A Guide for Setting Up an Employee Referral Program

Kristina Martic | 6/29/2018 | Tutorials

Looking for a how-to guide to help you set up your first employee referral program? Searching for best practices and ideas to improve your existing program? If so, you will love our guide for setting up an employee referral program!

Employee referral programs: The best way to hire and retain talent

Do you have a job opening?

Are job boards your first place to promote that job opening?Trust me, there is a better and much more affordable way to get to the higher-quality job candidates. Try with your own employee referrals!

Yes, that’s right. By setting up a structured employee referral program, you can turn your own employees into an effective recruiting lean mean machine.

Instead of spending your time and money on job boards, invest more resources into your own employees.Why?Because employee referral programs are a great way to improve your time, cost and quality of hire.

Introducing these programs also has a positive effect on employee retention and turnover rate.

The common statement that referred candidates turn into best employees is not an opinion, it is a fact based on data. This is why every company should use an employee referral program.

If you’re about to set up your first employee referral program or you’re searching for best practices and ideas to improve your existing program, this blog post is for you. Read and enjoy! 🙂

How to ste up an employee referral program?

Setting up an employee referral program may seem like a very complicated, daunting task.

This is why we broke it down into 4 easy steps.

The steps outlined below will help you plan, design, promote and maintain a successful employee referral program:

Step #1: Plan

➡️ Understand your hiring needs and resources

The cornerstone of every effective employee referral program is understanding and defining your hiring needs and resources (your employees and company culture).

These questions will help you define your hiring needs:

Do you need to fill a lot of different positions?

Do you have problems finding suitable candidates only for a certain position?

This software offer employee referral email templates which can be automatically sent to your employees when the need arises.

Employees will get the email with the link and social media buttons. That way, they can easily share your job via their personal social media profiles with just one click!

These tools will also make a life a lot easier for your hiring team.

They won’t have to track manually who recommended which candidate or how many people shared the link, clicked on it etc. These tools have powerful analytics that will do that automatically and present all collected data in beautiful reports.

➡️ Set rules

If you want your employee referral program to be successful and productive, you need to make it clear, consistent, transparent and fair.

Set clear rules in the beginning so all parties know exactly what to expect - and then make sure you stick to it.

Step #3: Promote

If you want to introduce an employee referral program to your company, a great way to do that is to organize an official launch.

You can organize a special event or simply have your CEO announce your new program in the regular all-hands company meeting.

Be careful not to bore your employees with every little detail about your employee referral program. Present only the most important information and focus on motivating your employees to take part in your brand new program!

A great way to keep your employees interested and excited is to gamify your employee referral process.Here is how you can do it:

Divide your employees into teams and encourage friendly competition

Design the point system and define actions they need to take to earn points(For example: 10 points for sharing your job opening on their social media profiles; 100 points for sending in a qualified candidates’ resume.)

Create leaderboard so everyone can see how each team is performing.

➡️ Measure

In order to evaluate your previously set goals, you need to track and measure the result of your employee referral program.

Analyzing your results will also help you discern your best practices and bottlenecks.

The most commonly used quantitative employee referral metrics are:

Employee referral rate: The overall percent of hires who came from referrals

Participation rate: The percentage of your employees who took part in your employee referral program in a certain timeframe

Referral to hire ratio: The percentage of the referred candidates that were hired.

The most commonly used qualitative employee referral metrics are:

Hiring manager satisfaction

Candidate satisfaction

Referring employees satisfaction.

Employee referral ideas from Google and Booking.com

Here are a few best practice examples of employee referral ideas used by big brands:

Be creative! Booking.com was having a hard time sourcing Portuguese-speaking customer service representatives. The solution? The recruiting team brought in Portuguese food for lunch for the entire office and left referral cards, asking for more Portuguese-speaking referrals.

Be specific Google asks their employees specific questions such as “Who is the best finance person you ever worked for?” or “Do you know a great salesperson in New York?”. When being asked so specific questions, their employees were much more likely to think of a great candidate.

Ask for referrals during the interview If someone is performing well during the interview, a Booking.com recruiter will ask him or her if they know someone else who would be good in a customer service role - someone they would like to work with.

Useful employee referral program resources

Here are some useful, free resources you can utilize to fasten and upgrade your process of setting up an employee referral program:

Email templates

To help you save time, we created templates for emails you will need to keep your employee referral program up and running: